The ECJ has recently provided guidance on when a trademark owner can prevent a competitor from using its trademark as an internet keyword.


Background

Interflora issued proceedings against Marks & Spencer for trademark infringement after M&S purchased the Google keywords “Interflora”, “Intaflora” and “Inter-Flora”. A Google search against any of these words would reveal a sponsored link to M&S’s own flower delivery service and Interflora contended that this infringed its trademark. In our previous edition of Brandhawk in July 2010, we reported that the High Court had referred certain points of law arising from the case to the ECJ for its guidance.


ECJ’s Preliminary Ruling

The ECJ’s ruling was delivered on 22 September 2011. The ECJ has referred the case back to the High Court to make a final decision applying the ECJ’s guidance on the statement of law it provided.

The ECJ issued the following statements of law in order to assist the High Court:

  • The trademark owner may prevent a competitor from advertising using a keyword identical to the trademark where the competitor’s use is liable to have an adverse affect on one of the functions of the trademark.

  • The ECJ gave the following guidance on when the use may have an adverse affect on each of the functions of the trademark:

    (a) Origin function: One of the functions of a trademark is to indicate the origin of the goods or service. Whether this function is adversely affected will depend on the presentation of the advertisement. The function will be adversely affected if the advertisement does not allow “reasonably well-informed and reasonably observant internet users” to ascertain whether the goods/service originate from the trademark owner or a third party (or enables them to do so only with difficulty). This might occur where the third party advertisement suggests a link between it and the trademark owner or where the advertisement is so vague that the origin is indeterminable. Therefore if the High Court finds that the search results found by internet users searching for “Interflora” would lead those users to incorrectly believe that M&S flower delivery is part of Interflora, then the function of the Interflora trademark in indicating origin will be adversely affected.

    (b) Advertising function: The ECJ has already ruled in the case of Google France that the use of a keyword identical to a trademark will not have an adverse effect on the advertising function of the trademark. Whilst the use may have repercussions on the advertising function, the mere fact that the trademark owner will have to intensify its advertising as a result of the use is not, in the ECJ’s opinion, sufficient to conclude that the advertising function is adversely affected.

    (c) Investment function: Trademarks are also used to acquire or preserve a commercial reputation capable of attracting consumers and retaining their loyalty (the so-called investment function). In circumstances where the trademark already enjoys a commercial reputation, the investment function is adversely affected when the use affects the reputation and jeopardises its maintenance. However if the only effect is to force the trademark owner to adapt its efforts in acquiring or preserving the reputation then this will not be sufficient to amount to “adversely affecting” the function.

  • A trademark owner may also prevent a competitor from using a sign similar or identical to the trademark where that use takes unfair advantage of the distinctive character or repute of the trademark without due cause (known as free-riding) or is detrimental to the distinctive character (known as dilution) or repute (known as tarnishment).


    (a) Free-riding: This may be most simply described as a third party “riding on the coat-tails” of the trademark’s reputation. The ECJ admitted that it cannot be denied that a competitor who deliberately chooses a keyword similar or identical to a trademark is doing so with the purpose of taking advantage of the reputation of the trademark and will usually derive a real advantage from it. However if the use of the trademark is within the ambit of fair competition then it will not be “without due cause” (for example, if offering a genuine alternative to the goods or service – see further below).

    (b) Dilution: This is caused when a trademark’s ability to distinguish the goods or services for which it was registered is reduced. Once a trademark is diluted, it is no longer able to create an immediate association with a specific product. For example, dilution may occur if the advertising on the basis of such a keyword contributes in turning the trademark into a generic term. This is closely linked to the origin function of the trademark.

    (c) Tarnishment: This is caused when the goods or services, for which the identical or similar sign is used by the third party, may be perceived by the public in such a way that the trademark’s power of attraction is reduced.

  • However, if none of the above criteria are satisfied, the trademark owner may not prevent competitors displaying advertisements on the basis of keywords similar or identical to the trademark which offer an alternative to the goods or services provided by the trademark owner – providing that the alternative goods or services are not a “mere imitation”.

Comment

Whilst this decision does not break significant new ground, it provides a useful summary of the law in this area as set down by previous decisions. The ECJ ruling manifested the Court’s difficult objective of keeping a balance between encouraging fair and legitimate competition and protecting trademark owners from unfair use of the goodwill attached to their brands. It will be interesting to see whether the High Court finds that internet users were likely to be confused into assuming that M&S was/is part of the Interflora network (rather than simply competing with it) and therefore guilty of infringement by adversely affecting the trademark/brand’s “origin function”.

Going forwards any similar cases will largely turn on their specific facts and each will be decided on their own merit. This will not help to create certainty on the issue of keywords and trademarks and so we would suggest that you seek legal advice before engaging in this practice.



For more information on this or any other similar trademark law issue, please contact Liane Bylett or Clive Lee by emailing Liane or Clive or by calling them on 08450 990045, or speak to your usual contact in the Commercial Disputes Team.



This document is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from taking any action as a result of the contents of this document.